Energy Tomorrow Blog
Posted November 22, 2021
Amid increasing energy costs impacting American households – the national average price for a gallon of gasoline (all grades) was $3.49 as of Nov. 15, higher than at any point since 2014. In California gasoline was $4.61 per gallon as of Nov. 15, with premium at $4.89. We have discussed the demand-supply mismatch and factors affecting U.S. production, both contributing to higher costs, and the need to support American oil and natural gas.
Some think a solution to higher gasoline prices is halting U.S. crude oil exports. A number of experts have weighed in on that, with IHS Markit cautioning a new crude export ban could make things worse.
In the Q&A below, API Chief Economist Dean Foreman and Kevin O’Scannlain, API vice president of Upstream Policy, talk about why the U.S. has exported crude oil since a 40-year export ban was lifted in 2015, and why reimposing the ban would be bad policy – for the U.S. and American consumers.
Posted November 18, 2021
Historically, a combination of demand outpacing supply, low inventories and high imports has been a recipe for upward pressure on prices. API’s new Monthly Statistical Report (MSR), based on U.S. petroleum primary market data through October, reflected these directions as prices struck their highest levels since 2014 for crude oil and 2008 for natural gas.
Along with the economy, U.S. petroleum demand remained solid in October with the highest gasoline demand for the month since 2017 as well as record refining and petrochemical demand for other oils – intermediate products in refining and petrochemicals – for the month of October.
To meet demand, U.S. refining activity matched its October 2019 capacity utilization rate of 85.8%. Consequently, U.S. crude oil inventories (excluding the Strategic Petroleum Reserve) fell to their lowest levels for the month since 2014, and U.S. crude oil imports rose by 0.9 million barrels per day (mb/d) year-on-year.
Posted November 17, 2021
Today’s scheduled Gulf of Mexico oil and natural gas lease sale is a positive step for American energy and a more secure energy future. We’re hopeful the sale signals Biden administration willingness to work with America’s oil and gas producers to foster safe and responsible development on federal lands and waters.
The federal offshore is particularly strategic, since development there can take seven to 10 years to reach production. The industry urges the administration to follow up today’s Lease Sale 257 with more sales and to take the necessary steps to establish a new five-year offshore leasing program to replace the current program, which expires next year.
A new offshore leasing program will go a long way toward fostering the certainty that companies producing in the U.S. need to make the investments and commit the resources needed to develop critical offshore energy for the future.
Posted November 16, 2021
Inflation is at its highest level in 31 years. At $3.41 per gallon, U.S. gasoline is more expensive than any time since 2014. Global natural gas prices have recently surged, reaching record levels across the world. Meanwhile, with winter coming, U.S. consumers could see increased household energy costs.
Clearly, gasoline and other energy costs are critical pressure points for family budgets.
So it is worth unpacking the dynamics behind higher energy prices, identifying policy options that could worsen the situation – such as halting U.S. crude oil exports – and encouraging a smarter approach before today’s Senate committee hearing on these topics.
Posted November 11, 2021
The Biden administration continues to look for answers on increased energy costs resulting, in no small part, from its energy policies. Higher costs for energy certainly have played a big part in the highest consumer prices since 1990.
Starting this summer, White House blamed OPEC+ for not accelerating crude oil production to meet post-pandemic energy demand. The crude oil demand-supply mismatch has put upward pressure on crude costs, driving prices at the pump that were 50% higher in October than October last year.
Then, in the past week U.S. Energy Secretary Jennifer Granholm shifted blame for lagging crude oil supply to the natural gas and oil industry – for “not flipping the switch as quickly as the demand requires,” and for not using federal leases, on and offshore. …
President Biden, Granholm and others in the administration have said they are looking at all available tools that could provide relief to American consumers, but the administration has bypassed the best tool – fostering increased U.S. production.
Posted November 5, 2021
For the second time in less than three months, OPEC+ has rejected the Biden administration’s plea for accelerated crude oil production. With U.S. gasoline prices averaging $3.39 per gallon – the highest in seven years – that’s certainly not what the White House wanted to hear from the oil cartel.
As we’ve said before, the administration should focus on the energy solution that’s here at home, not with nations that don’t care about America’s consumers, economy and security.
U.S. natural gas and oil, not OPEC+, is the answer to our country’s energy needs, now and in the future.
Posted November 2, 2021
Bad news: Energy supply crunches are hitting Americans where it hurts.
Good news: Solutions are just beneath our feet.
The fundamentals of natural gas demand outpacing supply have driven energy prices to their highest since 2014. With colder weather coming, some analysts expect a global natural gas supply crunch with potentially wide impacts this winter – including possible market tightening that could affect U.S. household budgets, drive up costs for consumers and create havoc for others.
Posted October 29, 2021
Some jaws dropped a week ago when President Biden told a CNN Town Hall that he didn’t expect gasoline prices would come down until sometime next year and that, frankly, he didn’t have a near-term answer for Americans dealing with the highest prices at the pump in seven years, according to the U.S. Energy Information Administration.
Since summer the administration’s strategy has been to ask OPEC+ to producer more oil (see here and here). This week Amos Hochstein, U.S. senior advisor for Global Energy Security, urged producers to produce more energy.
If only the administration’s encouragement applied to American producers. Though the president was hard-pressed at the town hall for a solution on gasoline prices, the answer is right before him: American natural gas and oil production. By American workers and helping support America’s economy.
Posted October 15, 2021
API’s new Monthly Statistical Report (MSR), based on U.S. petroleum primary market data through September, reinforced a combination of developments that has been recurrent so far in 2021 – that is, demand outpaced supply, inventories fell and, consequently, imports and prices rose.
Historically, this combination of factors has also led to further market tightening, which could put additional upward pressure on costs and prices.
The underlying drivers come back to the basics of demand, which reached a record high for the month of September at 20.6 million barrels per day (mb/d), and supply that has remained muted due to the industry’s continued financial, work force and supply chain constraints, coupled with a lack of policy support as we discussed here.
Posted October 15, 2021
News item #1: Because energy demand has continued to significantly outpace supply, the U.S. Energy Information Administration (EIA) expects U.S. households will spend more money on heating costs this winter compared to last winter – for electricity, natural gas, propane and heating oil.
News item #2: Again, largely due to the demand-supply mismatch that’s further tightened energy markets and put upward pressure on prices, White House officials continue to wrestle with the impacts of higher consumer energy costs, including gasoline.
News item #3: Coal use has climbed, complicating U.S. efforts to reduce carbon dioxide emissions. Bloomberg reports U.S. power plants are projected to burn 23% more coal this year, the first increase since 2013, driven by higher natural gas prices. …
Taking all of this in, let’s make this point: There’s affordable, reliable energy available in the U.S., right now – American natural gas and oil.